Living Poor in the Affluent City

Scott L. CummingsRobert Henigson Professor of Legal Ethics at UCLA School of Law; teaches and writes about the legal profession, public interest law, law and social movements, and community economic development

Over the past twenty-five years, Los Angeles—like many other global cities—has been transformed by affluence. In 2017, the median housing price in Los Angeles County was $570,000, while the median income was $64,300. Based on guidelines from the federal Department of Housing and Urban Development, a family of four could earn up to $50,500 and still be deemed low-income for the purpose of qualifying for affordable housing. By that metric, over two in five residents of Los Angeles are poor. Average rents in LA County exceed $1800 a month, making it the tenth most expensive rental market in the United States. Los Angeles is now one of the most unequal cities in the world, with a Gini coefficient of .50 in 2014.1 It is ranked the seventh most unequal large metro region in the United States.2 Inequality has been driven by the explosion of wealth at the top (fueled by investment income and, now, the Trump tax giveaway to the rich), but also by decreasing wages for low-income workers, which have declined in inflation-adjusted real terms for the lowest-paid workers by one-quarter between 1979 and 2014.3 Further, inequality is not distributed evenly across racial lines, with African American and Latino workers experiencing declining wages since 2000, while wages for other groups have slightly increased.4 Overall, workers of color more likely to be in poverty than white workers.5

What does this mean for the majority of Angelenos who cannot afford the median price house or even a one-bedroom apartment in places like Central Hollywood (where the average rent for a one-bedroom apartment is $1860),6 not long ago shunned by well-off residents, but now a site of radical gentrification? This question is important not just for Los Angeles, but for cities around the country—San Francisco, New York, Chicago, Boston, and others—which are experiencing similar development pressures and demographic shifts.

The essays in this important series explore what it means to be poor in Los Angeles at this particular moment of hyper-gentrification. Alex Scott provides a working definition of gentrification, as a process by which “neighborhoods that once housed and catered to a predominately poor or working-class population receive an influx of middle- and upper-class residents, which creates a corresponding transformation of the amenities and consumption options available in that neighborhood.”7 Gentrification has both positive and negative connotations. It is associated with the “revitalization” of historically depressed neighborhoods, which could benefit existing residents with jobs and services; but, as Scott notes, it is also associated with demographic turnover and displacement, which forces existing low-income residents and residents of color out to make way for more affluent residents and whites. Focusing on gentrification as a force for displacement, I reflect on the themes from the essays, organizing them under the topics of causes, consequences, and solutions.

I. Causes

Why has Los Angeles become so unequal? Commentators point to various factors. Key among them is demographic change, such as the significant increase in immigrant residents over the past thirty years. Researchers have also emphasized changing attitudes toward city living, driven in part by increasing costs of urban sprawl. The postwar paradigm of urban development was suburbanization and white flight, by which upper- and middle-class whites moved to segregated suburban communities in reaction to the influx of African American workers leaving the South for war-time industrial jobs in what scholars have called the Great Migration.8 This suburban ideal was built around deliberate exclusionary local law and policy, buttressed by zoning restrictions, discrimination, and sometimes violence.9 By the 1980s, the costs of suburbanization—traffic, pollution, and civic alienation—caused many suburbanites to reassess their location and a reverse movement of affluent whites back into the city commenced, first in small numbers, then quickly increasing in scale.

The essays here focus on another cause of LA’s gentrification: deliberate city policy. Against the backdrop of demographic change and shifting suburban attitudes has been a concerted effort by local government to reshape the City of Los Angeles into a space of economic revitalization—one which would lure back investment dollars and affluent residents, buttressing city finances and increasing city cache. Thus, as Scott notes, gentrification “is not merely an unfortunate outcome of local policies, but an intended one.”10 Over the past thirty years, this deliberate policy has included the aggressive use of (now-defunct) redevelopment law to publicly finance projects like the Hollywood and Highland mall and L.A. Live.11 City policy also operates in a more subtle fashion. Ysabel Jurado’s important contribution on Historic Filipinotown (HiFi) notes how the LA Planning Commission recently put out the “North Westlake Design District” plan, which initially sought to restrict traditional uses, such as auto parts sales, and has since focused on regulating “attractiveness” in order to entice private developers lured by “creeping commodification.”12 These policies have both attracted and been promoted by investors, who look “toward the cities as new sites of profit-making.”13 As Steve Lopez reported in the Los Angeles Times, these investors are increasingly global, pulled together by venture capital funds seeking profit through tear-downs of historic housing stock, building at high density, and converting rent stabilized apartments to market-rate.14 Here, again, Jurado’s essay is on point in describing how HiFi’s high proportion of rent-controlled housing “creates a perverse incentive for developers to buy up [rent-controlled] properties and push tenants out.”15

II. Consequences

As neighborhoods like HiFi underscore, gentrification pressures are leading to waves of displacement. Displacement occurs when developers see opportunities for profit and take action—sometimes legal, sometimes not—to force out tenants in the quest for a hefty investment return. The City of Los Angeles currently has rent control, but it is limited by the 1995 Costa-Hawkins Rental Housing Act, which restricts local rent control ordinances by permitting vacancy decontrol (allowing landlords to raise rents to market rate when tenants move out), preventing cities from imposing rent control on properties built after 1995, and also prohibiting rent control for condos and single-family homes.16

Rent-controlled units are rapidly disappearing. According to the Coalition for Economic Survival, 1372 rent-controlled units were removed from the market in 2016, up nearly one-third from 2015.17 And this figure reflects only evictions that have been properly registered with the city. Under Costa-Hawkins, it is perfectly legal for landlords to evict tenants to make way for condo conversions. Often, what happens is that landlords exert informal pressure on existing renters: refusing maintenance, providing misleading information, or promising “cash for keys” as an incentive to vacate without eviction. Although tenants have protections on the books, these often go unenforced, as the essays reveal, either because tenants do not know their rights or because they become overwhelmed by the difficulty of trying to enforce them. As a result, developers “see opportunities for profit in what they deem to be undervalued properties.”18

There are related pressures. Scott notes the impact of Airbnb, which has resulted in a loss of residential housing to “urban tourism.”19 In contrast to the image of homeowners renting a spare room, most Airbnbs “are supplied by companies and landlords renting out entire properties on a permanent basis.”20 Further, 6 percent of all Airbnb hosts in Los Angeles are leasing companies with multiple listings that generate 35 percent of the Airbnb revenue in the city.21 There is a correlation between increases in Airbnb listings and evictions under the Ellis Act, which permits landlords to evict rent stabilized tenants to go out of the rental business.22 And although it is currently illegal for a homeowner to rent for less than thirty days in many residential areas,23 Airbnbs proliferate due to lack of enforcement, increasing the conversion of housing to tourist accommodations. Housing conversion has ripple effects on surrounding businesses, which turn toward tourist-oriented entertainment and retail—undercutting the “authentic experience of living in a city” that Airbnbers often claim to desire.24

As Soham Dhesi shows, communities are searching for meaningful alternatives in the face of gentrification pressures. Protecting mobile homes as an affordable housing option is one such movement, though one that is also limited by legal and political constraints.25 Notable among them is the limit on financing because loans for mobile homes are considered “chattel loans,” not home loans available on more favorable terms.26 More ominously, Dhesi notes how mobile home owners’ lack of ownership of the underlying land subjects them to dramatic and potentially catastrophic rent increases—highlighting once again the need for some type of rent control. Yet the law is in flux, with Goleta’s mobile home rent control ordinance upheld by the California Supreme Court in a way that left the door open for similar ordinances to be struck down “if park owners purchased their property when such ordinances were not already in place.”27 Echoing the HiFi study, the mobile home analysis also shows how mobile home park owners may circumvent rent control by selling spaces to permanent mobile home residents, thereby taking them out of the rental market.

Other perils loom. Laylaa Abdul-Khabir provides a cautionary tale about stadium development, drawing a straight line from the bulldozing of Chavez Ravine to make way for Dodger Stadium to the current development of the Rams Stadium in Inglewood, where median housing prices have risen 12 percent from 2016 to 2017, amplifying fears of displacement and gentrification in the historically working-class African American city.28

Finally, as Mia Lattanzi shows, the growth of Los Angeles also has economic and environmental impacts outside of its boundaries. The city’s long and controversial history of water acquisition, led by the powerful LA Department of Water and Power, has had particularly significant impacts on the Owens Valley, converting the Owens Lake into a dry lakebed that emits noxious PM10 particulate matter, polluting the air and undermining the cultural heritage of the indigenous Paiute Shoshone people.29

III. Solutions

As the essays in this series probe the causes and consequences of inequality in LA, they also point toward strategies and potential solutions for building a city based on shared prosperity and shared experiences, rather than islands of affluence isolated from those in economic insecurity. What these essays reveal is a set of tools and policies that can be used to reduce the unfairness of the current system and promote more equitable development. But, even more importantly, they reveal the crucial need for community mobilization to reclaim LA as a city for everyone.

On the positive side, LA residents and city officials recognize the need for dramatic action and have, in fact, taken meaningful steps to address inequality. LA became one of the first cities in the country to pass a $15 minimum wage law and has passed a number of voter initiatives to address problems of housing and homelessness. Measure JJJ, passed in 2016, requires that affordable housing be built by developers whose projects require a zone change or general plan amendment that increases floor area or density, and provides specialized incentives to build affordable housing around LA’s growing public transportation infrastructure.30 Measure H, passed in 2017, raises the county sales tax by one-fourth of a cent, allocating that revenue for housing the homeless.

Yet Los Angeles has so far failed to live up to these promises. It remains a city home to glimmers of hope unrealized or unsustained. NIMBYism­­—or mobilization against development by community residents under the rallying cry of “Not In My Backyard”—continues to thwart the siting of homeless housing while affordable housing continues to stall despite JJJ and local linkage fees, which require developers of market-rate housing to pay a fee per square foot that goes to fund affordable housing.31

A primary goal of community-based movements for equitable development has been to hold the city accountable for addressing gentrification—to create, in the language of its proponents, “better neighborhoods, with the same neighbors.”32 The essays illuminate how a savvy combination of political and legal mobilization can be used as a tool in the struggle against displacement. Community benefits agreements (CBAs) are one important example of a legal tool pioneered in Los Angeles by community groups to slow down or prevent gentrifying development by opposing the land use and environmental approvals such projects require to proceed. By doing so, community groups can negotiate CBAs that serve as vehicles to extract concessions from developers of projects—like the LA Rams Stadium—for affordable housing, local hiring, and living wage jobs. Daniel Foster’s essay provides a case study of how local organizing against private development can, in some cases, succeed in taking land off the speculative market, locking in affordability through legal mechanisms like community land trusts (CLTs), which separate ownership of land from the improvements thereon, allowing the land to be held in perpetuity by nonprofits committed to maintaining affordability.33 In Foster’s account of T.R.U.S.T. South LA’s success in acquiring the ownership rights to Rolland Curtis Gardens (RCG), he shows how legal resistance can create space for CLT development. He also notes the limits to the “nonprofit model of affordable housing,” which to generate enough revenue to meet debt service and operating costs requires nonprofit CLT owners, like T.R.U.S.T. South LA, to raise rents above those guaranteed under prior publicly subsidized housing.34 Indeed, one of the tradeoffs of the RCG development was that existing tenants were not guaranteed a right of return, just priority in the new housing.35 But this is less a critique of the CLT model than of the broader social forces and policies that make it a necessary centerpiece of American affordable housing policy. Without robust public funding, advocates have to use the tools at hand to preserve and expand affordable housing where they can. This, as Foster points out, may carry tradeoffs like higher rents. But RCG also doubled the number of affordable units in a market where that is extremely hard to accomplish. In this sense, Foster is correct that the “nonprofit model of affordable housing provision cannot be expected to offer the same degree of accessibility as publicly subsidized or publicly owned affordable housing. As such, CLTs might be better understood as a supplement to, rather than a substitute for, traditional public housing.”36

As these compelling essays show, we are at a pivotal moment in LA history. Residents of Los Angeles are now living through the jagged conflict of city-wide gentrification, raising fundamental questions about its benefits and costs. What kind of city will we become? As dire as many of the stories described are, there is also reason for optimism. For the first time in a generation, policy ideas like rent control are back on the public agenda in a real way. This fall, California voters will decide whether to repeal Costa-Hawkins.37 And there is energy at the grassroots with coalitions like UNIDAD and ACT-LA leading the way in the movement for economic justice in LA. The creation of a “people’s plan” for rezoning and redevelopment, which includes affordable housing, serves as a counterweight to the top-down planning illustrated by the HiFi design district.38 Yet the fight for the “right to the city” remains.39 Engaged scholarship like that exemplified in this series is essential to equipping participants with knowledge and fortifying them in the fight.

[1] The Gini coefficient measures income inequality on a scale of 0 to 1, with 0 representing no inequality (for instance, when everyone earns the same amount) and 1 representing complete inequality (for instance, when one person earns all the income and everyone else earns none). By comparison, the Gini coefficient for the entire United States, one of the top five most unequal countries in the world, is closer to .40.